The bad bank starts to face its first internal tensions. Sareb, the company holding all damaged assets from banks and one of the key players in the recovery of the investors´ trust towards Spain and its financial system, is facing discrepancies two months after it was formally constituted, according to sources close to Sareb.
On one side, the new business plan being prepared by its president, Belén Romana and the managing team she is creating. On the other side, the rejection of the shareholding banks to accept certain requirements established by foreign funds to enter the capital.
The board of Sareb was summoned yesterday at 9.30 pm in order to look into these matters, as well as study the absorption of the assets from group 2 banks (BMN, Liberbank, Banco Caja España Duero and Caja 3).
The managing team would be thinking of modifying the initial plan in depth, according to those same sources. This plan, necessary for the formal launching of Sareb, was designed two months ago by external consultants, the Ministry of Economy, the Restructuring Fund (Frob) and the Bank of Spain. It was presented to the current shareholders and should be approved by the board, once the company and its shareholders were organized.
Several players are totally against the modification of the business plan. They consider that the change implies certain risks, among them, a loss of credibility.
The new managers are thinking of modifying the forecasts on the evolution of the real estate market in Spain (towards worse scenarios). The original project was based on the forecast made in the stress test for banks carried out by Oliver Wyman last summer. To modify these could generate doubts on the solvency test and the capital needs of Spanish banks.
Another matter which could be revised would be the disinvestment plan on the assets and the fund circulation model. The need to slow down the sale of those assets and the repayment periods for the guaranteed debt issued by Sareb would be studied. This debt is used by institutions to obtain liquidity from the ECB, who stands for the quick repayment of these titles.
The modification could mean receiving again the green light from Eurostat to the business plan. This is a requirement in order to prevent the financial burden in Sareb from consolidating in the public accounts.
The same sources explain that these changes are cooling down the interest from investors who could become shareholders when the company extends its capital in 1100 million Euros in order to assume the assets from Group 2.
According to the planned calendar, its credits and properties (around 16000 million Euros) will be integrated on the 28th February. The extension should therefore be approved before that date.
(…) “Sareb´s managers are currently working on the revision and updating of the business plan, which will be ratified by the managing directors and by the Troika”, Sareb indicated. The business plan has been adjusted based on the evolution of the portfolio. All details on the assets which will be received from Group 2 are available, as well as the balance situation up to 2012.
There is also a division among shareholders in reference to the incentives demanded by foreign funds in order to join Sareb.
The Frob, aware of the impact on credibility this foreign participation would have, is for the acceptance of their conditions. On the other hands, banks, savings banks and insurance companies are against it.
(…)The international funds are interested in investing only if they can have a vote on the management of Sareb. They also demand a preferential purchase option on the most liquid and with the highest quality assets of the bad bank.
The shareholding institutions are against granting incentives which they themselves have not had, as well as taking any decisions which could affect their own interests in the real estate market. One of the great risks of the entry of banks within Sareb is confirmed: the conflict of interest. (…)